Reuters - Cumulus Media Inc (CMLS.O)
has sued JPMorgan Chase & Co (JPM.N)
seeking a court order declaring that the second-largest U.S. radio network is
allowed to proceed with a refinancing that it says would deleverage the company
by up to $305
million.
In a lawsuit filed
late on Monday in Manhattan federal court, Cumulus accused JPMorgan of
breaching a 2013 credit agreement and "unreasonably" withholding consent
to certain components of the Atlanta-based company's planned refinancing.
Cumulus said that
JPMorgan's actions in its role as administrative agent under the credit
agreement are threatening a deal it recently reached with bondholders, which
was contingent upon the refinancing being completed by Jan. 27.
"Cumulus needs
to proceed with its proposed refinancing, and it needs to do so quickly,"
Cumulus said in the complaint.
A spokesman for
JPMorgan did not immediately respond to a request for comment.
According to the
lawsuit, in response to an industry-wide decline in business, Cumulus, which
owns 447 radio stations, has launched a series of initiatives aimed at
improving ratings and revenues.
But Cumulus said its
ability to follow through on these initiatives is hindered by a "heavy
debt load" of $2.4 billion, including $610 million of senior notes due in
2019.
As a result, Cumulus
reached a deal with a majority of bondholders in which they would refinance
those senior notes using borrowings from Cumulus's $200 million revolving line
of credit, the lawsuit said.
The deal allows
Cumulus to retire the notes at a discount of up to 50 cents on the dollar and
avoid a "springing maturity" on a $1.84 billion loan that occurs if
more than $200 million of the notes are outstanding in January 2019, the
lawsuit said.
But Cumulus said
JPMorgan has refused to take various steps required under the plan, including
allowing the transfer of the revolving credit line to new lenders and executing
a loan amendment allowing the company to access the credit line.
The lawsuit seeks a
court order declaring among other things that Cumulus's credit agreement
permits it to use the revolving credit line as part of its refinancing plan and
may amend a restriction that would enable it to access the credit line.
It also seeks an
order requiring JPMorgan to consent to the assignment of the credit line to the
new lenders and undertake other actions necessary to effectuate the
refinancing.
The case is Cumulus
Media Holdings Inc. et al v. JPMorgan Chase Bank, N.A., U.S. District Court,
Southern District of New York, No. 16-09591.
Reuters
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